MUMBAI: Home buyers in Mumbai and the rest of Maharashtra are set to receive a major relief as the state government is planning to reduce the stamp duty on residential properties spread over less than 750 sq ft for the economically weaker, lower income and middle income groups.

The stamp duty rates will be rationalised with 1% levy for houses for economically weaker section (EWS), 2% for low income group (LIG) houses, and 3% of the agreement value for middle income group (MIG) houses. Buyers of higher income group (HIG) apartments will continue to pay stamp duty at current rates.

At present, home buyers pay 5% stamp duty on ready reckoner rates -government specified rates -or market rate, whichever is higher. In a far-reaching measure, the policy has also proposed that the stamp duty will be calculated for these segments on the basis of market value at which the transaction is concluded as mentioned in the agreement.

The state government's draft housing policy , that has proposed these changes, has defined EWS houses as residences spread over up to 269 sq ft, LIG houses spread over 270 to 538 sq ft, MIG houses as 539 to 753 sq ft, while any house spread over more than this area is defined as HIG. Registration charges for these houses will also be lowered to the standard Rs 1,000 per transaction against the current levy of Rs 25,000.

All of these proposed measures are aimed at making housing units, which are less than 750 sq ft, relatively affordable by reducing the stamp duty burden for home buyers.

"Home buyers stand to gain on two counts as the stamp duty rate is being reduced and the base will also be lower for these levies. In most of the high-value pockets of Mumbai and other cities, ready reckoner rates have already moved above the market value and therefore stamp duty on market rate will be effectively lower," said Manish Kumar, managing director of Strategic Consulting at JLL India.

Ready reckoner rates are revised every year based on weighted average of transactions concluded in the year gone by . Earlier this year, the state government had raised these rates by over 30% in most pockets of Mumbai.

Following this increase, ready reckoner rates had moved above market values prevailing in many localities. While the average increase across the city is between 15 and 20% this year, the highest rise stands at about 40%.For 2014 and 2013, the state government had raised the ready reckoner rates by an average 13%.

Areas such as Worli, suburbs, including Goregaon, Borivali, Malad, Chembur, Ghatkopar and Vikhroli, have seen rates go up by as much as 30-40%, and were among the most affected areas.